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What is an SBA Loan?


The Small Business Administration (SBA) has created a program of government-guaranteed loans designed to help give small businesses that may not otherwise qualify for credit get the funds they need. SBA loans make it possible to qualify businesses more easily and provide them with more flexible terms than conventional loan options, letting you preserve working capital for other expenses. 




Qualifying for an SBA loan is easier than qualifying for other loans. First, the SBA allows higher loan-to-value ratios. Depending on your loan request, you may be able to borrow up to 100% of your financing needs. Secondly, we can potentially offer longer finance terms with different payment options. This may be especially advantageous if your business is growing rapidly. 


SBA loans can help growing businesses purchase or renovate real estate, acquire fixed assets such as heavy machinery or specialized equipment, or supply working capital for ongoing financing needs.

There are two main types of SBA loans for the purchase of commercial real estate:


The SBA 7(a) loan, the most common general-purpose SBA loan, offers single and multiple disbursement term and real estate loans. Use your loan for working capital or to purchase a business, inventory, or land for construction.
Ideal ForFor-profit businesses that need funds for expansion, purchase another business or manage cash flow. The 7a term loan is also an effective financing tool for experienced business owners who are starting a new business. Your business must meet SBA guidelines.
How it WorksA 7(a) loan offers flexibility, longer terms, and lower down payments, compared to other types of business financing.

Because it is backed by a SBA guarantee, you can access larger lump sum funding to fund start-up costs, equipment, inventory and working capital.

Longer terms offer you lower payments to free up cash flow while you grow your businesses.

Additional Information

Credit AmountTerm Loans from $25,000 to $5 million.
Up to 20 years on Real Estate; Up to 10 years on Machinery or Equipment.
Terms
  • Working Capital: up to 7 years.
  • Equipment: up to 10 years (or useful life).
  • Real Estate: up to 25 years.
Interest Rates
  • Fixed or variable.
  • Terms less than 7 years: NY Prime + 2.25%.
  • Terms equal to or greater than 7 years: NY Prime + 2.75%.
CollateralSecured interest business assets and/or a mortgage on real estate.
Fees
  • SBA Guarantee Fees:
    • Loans up to $150,000 — 2% of the guaranteed portion of the loan.
    • Loans from $150,001 to $750,000 — 3% of the guaranteed portion of the loan.
    • Loans from $750,001 to $5 million — 3.5% of the guaranteed portion up to $1 million and then 3.75% for guaranty above $1 million.
  • Lender Packaging Fee: $1,000.
  • Filing Fees: Minimum of $50.
Underwriting Requirements
  • Personal guaranties by all owners of 20% or more.
  • Adequate business collateral, or personal assets securing personal guaranty, i.e. mortgage on a home.
  • Hazard Insurance.
Financing
  • Loans less than or equal to $150,000 — SBA provides 85% guarantee.
  • Loans greater than $150,000 — Guaranteed amount is 75%.


The 504 loan is designed for business owners who plan to expand their operations through land acquisition, building acquisition or construction or finance machinery or equipment purchase.
Ideal ForBusiness owners who want a long-term fixed rate or adjustable rate loan to purchase, expand or construct owner-occupied real estate or purchase major, long-term (i.e. 10 year or longer usage projection) equipment. Businesses must meet SBA guidelines.
How it WorksBacked by the SBA, the 504 loan is generally is funded from three sources: Bank, the SBA and equity from the borrower.

There is also a requirement to meet certain local economic objectives, such as revitalization and redevelopment, income generation or business development.

Plus, benefit from longer terms and amortization and below market rates, compared to other types of business financing.

Additional Information

Credit AmountTerm Loans from $150,000 to $6,000,000 (up to $5,000,000 for public policy loans or $5,500,000 for manufacturing companies).
Terms
  • Up to 20 years on Real Estate; Up to 10 years on Machinery or Equipment.
  • SBA Loan: 20 years.
Interest Rates
  • Fixed or variable — negotiated rate between borrower and Bank.
  • SBA Loan: Below market fixed interest payment; loan rate set when debenture is sold.
Collateral
  • Assets being financed.
  • Bank holds First Mortgage on real estate or First Secured Interest in equipment and machinery.
  • SBA holds Second Mortgage on real estate or Second Secured Interest in equipment or machinery.
FeesGenerally 3.5% of SBA debenture amount and this fee may be financed in the loan.
Underwriting Requirements
  • Personal guaranties by all owners of 20% or more.
  • Adequate business collateral, or personal assets securing personal guaranty, i.e. mortgage on a home.
  • Hazard Insurance.
Financing
  • 50% financed by Bank.
  • 40% SBA Loan through Certified Development Company.
  • 10% Borrower Equity injection.

You can use a SBA loan or line of credit to cover many business projects and needs. Get detailed loan use information for your specific business need and find out how you can take advantage of SBA funding to maximize your business opportunities.
Business Acquisition or Expansion
  • Term loan for the purpose of purchasing or expanding an existing business.
  • $25,000 to $2,000,000.
  • Minimum of 10% cash down-payment.
  • Up to 10 years depending on the collateral type.
  • Principal and interest monthly, fully amortized.
  • Fixed and adjustable rates available.
  • Collateral: All of the business assets along with some owners’ personal assets if needed.
Business Real Estate
  • Term loan to purchase owner/user commercial real estate.
  • $50,000 to $5,200,000.
  • Up to 90% LTV available.
  • Up to 25 years.
  • Fixed and adjustable rates.
  • Principal and interest monthly, fully amortized.
  • Minimum of 10% cash down payment.
  • Collateral: First deed of trust on commercial, office, industrial properties, and other assets as needed.
Construction Loans
  • Loans for ground up construction and/or leasehold improvements of commercial real estate (owner/user).
  • $50,000 to $5,200,000.
  • Up to 80% LTV available.
  • Up to 12 months/adjustable rates.
  • Interest monthly, principal at maturity.
  • Collateral: First deed of trust on commercial, office, or industrial property(s) being constructed, other assets as needed.
Equipment Loans
  • Term loans to purchase new or used equipment.
  • $25,000 to $3,000,000.
  • Up to 100% financing available.
  • Up to 10 years depending on the collateral type.
  • Principal and interest monthly, fully amortized.
  • Fixed and adjustable rates available.
  • Collateral: Existing or purchased business equipment, other assets as needed.
New Business Development Loans
  • Term loan for the purpose of starting a new business.
  • $25,000 to $2,000,000.
  • Minimum of 30% cash down payment.
  • Up to 10 years depending on the collateral type.
  • Principal and interest monthly, fully amortized.
  • Fixed and adjustable rates available.
  • Collateral: All of the business assets along with some owners’ personal assets if needed.
Working Capital or Debt Consolidation Loans
  • Term loan for working capital/debt consolidation.
  • $25,000 to $2,000,000.
  • Working capital — Up to 7 years.
  • Debt consolidation — Up to 10 years depending on the collateral type.
  • Principal and interest monthly, fully amortized.
  • Fixed and adjustable rates available.
  • Collateral: Real property, equipment, deposit accounts, and other business assets.

An ACRES Real Estate Services, Inc. Company